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Action Plan for Insolvency ready in early June

26/06/2015 12:06
Cyprus` action plan for implementation of the insolvency framework is in its final stage and is expected to be submitted to the troika of international lenders (EC, IMF, ECB) around the beginning of July.

The action plan on insolvency is set to be discussed at the next visit of lenders on the island in July.
Under the updated memorandum, the Action Plan should be ready by the end of June.

Speaking to CNA, Head of the Insolvency Service Giorgos Karotsakis said that the action plan was under process by the Ministry of Finance. It was expected, as he said, to be ready in time to be submitted to the Troika and to be discussed during its next visit to the island in mid July.

According to the updated memorandum, the action plan should ensure the full functioning of the Insolvency Service, the IT infrastructure and the licensing insolvency consultants.

Karotsakis also said that the recent report of the International Monetary Fund (IMF) for Cyprus, demonstrates the significance of the insolvency framework, in terms of its contribution both to the restructuring of loans and encouraging and restoration of investment and development.

"The IMF report makes it clear that the insolvency framework will help reducing non-performing loans (NPLs) to a large extent, in order to reset the financial system through the effective reduction of the NPLs," he said.

However he refrained from making any comment on the IMF`s estimation according to which, the reduction in private sector debt resulting from insolvency framework implementation could be in the range of 3–12 percent of GDP due to demand factors. Based on an assessment done by the banks, the NPLs that could be eligible for the insolvency process could range between €1–3 billion (6–7 percent of GDP).

Karotsakis pointed out that the Insolvency Service takes all necessary measures and actions for the effective implementation of the insolvency context, he said however that many other actors were involved such as the courts, financial institutions, insolvency consultants and other government departments and agencies, that would have to work sufficiently for the best results. As he said, the action plan, covers all the above parameters, and there will be an evaluation and monitoring system for its effects on reducing NPLs.